Treasury Secretary Timothy F. Geithner is using a trip to Europe and the Middle East this week to shore up confidence in the U.S. economy and the dollar, though he warned Monday that the struggle to squelch the global recession is far from over.
“In my view, there are still significant risks and challenges ahead,” Mr. Geithner said at a news conference Monday in London after talks with British policy-makers, including Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling.
“We have done a great deal domestically— but there is a lot of uncertainty.”
Mr. Darling agreed that “there’s a lot of uncertainty in the world” regarding the the state of the global economy.
But Mr. Geithner and British officials said the United States and its economic partners have responded well to the financial crisis that nearly crippled world markets last autumn.
“I think we have remarkably strong consensus in place on core elements,” Mr. Geithner said.
Mr. Darling predicted that “there is a very good chance” that the United States and world economies will recovery and have sustained growth during the next few quarters.
“We are making progress; we are coming through,” he said.
Mr. Geithner traveled to Saudi Arabia on Monday and on Tuesday will visit the United Arab Emirates — the Arab world’s two biggest economies — in an attempt to reassure the Gulf States that the U.S. dollar assets they hold in large quantities remain a sound investment.
He also will meet with French officials in Paris later this week before returning home.
The secretary told CNN during an interview broadcast Sunday that the U.S. dollar’s role as the world’s reserve currency isn’t likely to weaken because global investors will continue to use it as a safe haven.
“When people are most concerned about risk, generally they want to be investing in the most liquid and safest markets in the world, which is still the market for our Treasury bills,” Mr. Geithner said. “We want to be sure we can maintain that basic response.”
The secretary on Monday also addressed concerns on Wall Street that the federal government so far has ignored pleas for financial aid from CIT Group, a New York-based lender that is facing a possible financial collapse.
CIT’s bond and share values have tumbled in recent days out of concern that the Federal Deposit Insurance Corp. has not allowed the lender to participate in its bond-guarantee program created last year to unfreeze debt markets.
“I’m actually pretty confident in that context we have the authority and the ability to make sensible choices,” he said. “We have a significant interest generally in trying to make sure the financial system gets through this [crisis], adjusts where it needs to adjust and emerges stronger.
But Mr. Geithner declined to say whether CIT will receive any additional money from the $700 billion Troubled Asset Relief Program.
“Obviously in that case, as always, we’re watching closely developments in those markets,” he said.